Wednesday, 12 July 2017

What’s next? – GOLD, OIL 12.07.17

Gold futures were higher in early trading on Wednesday, extending a recovery from multi-month lows in the light of rising political concerns due to the Trump-Russia scandal.

On the Comex division of the New York Mercantile Exchange, gold futures were up by 0.26 percent to trade at $1,217.90 a troy ounce as of 07:00 GMT.

Gold came under pressure last week following the release of upbeat employment data from the United States. According to the Labor Department, the private sector added 222,000 jobs last month, more than the initially estimated 179,000 jobs build.

Earlier this week, Asian nations were in the spotlight. China reported a 1.5 percent increase of its consumer price index for June and 5.5 percent growth of the producer price index.

Meanwhile, Japan said its current account surplus came in at 1.654 trillion yen, below an expected 1.796 trillion. Core machinery orders dropped 3.6 percent in May year-over-year.

Rising political instability in the world’s first economy will certainty push down the dollar, which could be seen as a positive factor for the the yellow metal.

The US dollar index, which tracks the greenback against a basket of six major rivals, was 0.13 percent higher at 95.91 by the time of this writing.

Ahead in the session, traders will be monitoring Fed Chair Janet Yellen’s speech in search for hints on the timing of the next Fed rate hike and details of the regulator’s plan to reduce its massive $4.5 trillion balance sheet later this year.

OIL

Oil futures were higher in Asian hours on Wednesday, as an industry report showed larger-than-expected draw in crude inventories last week.

The US West Texas Intermediate oil futures traded at $45.82 a barrel, up 1.73 percent from its prior close. Meanwhile, the London-based Brent crude oil futures added 1.47 percent to trade at $48.22 a barrel as of 07:00 GMT.

The American Petroleum Institute said late on Tuesday that crude stockpiles in the United States fell by 8.13 million barrels for the week ended July 7. This move is complementing a prior week drop of 5.76 million barrels. Analysts had expected a 2.5 million barrels decline.

As for gasoline inventories, API data reported an 800,000 barrels draw. Distillate stocks increased 2.1 million barrels, up from a previous week rise of 380,000 barrels.

Official inventories from the US Energy Information Administration (EIA) will be presented as of 14:30 GMT on Wednesday, with expectations for a 2.850 million barrels decline. Attention will also be directed to a tentative release of OPEC’s monthly report later in the session.

According to the the Energy Information Administration, oil production in the US is expected to rise to 9.9 million barrels per day (bpd) in 2018 from a prior 9.3 million barrels.